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Why Do Firms Enter into a New Niche Market? An Integrated View of Objective and Subjective Antecedents of Strategic Decisions |
Hui Yang1(),Zeyu Wang2(),Xufei Ma3(),Sai Lan4() |
1. School of Business, Renmin University of China, Beijing 100872, China; Detecon Consulting Co., Ltd, Beijing 100600, China 2. School of Business, Renmin University of China, Beijing 100872, China 3. Department of Management, The Chinese University of Hong Kong, Hong Kong 999077, China 4. HSBC Business School, Peking University, Beijing 100871, China |
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Abstract This study is based on behavioral theories and has the purpose of determining the predictors and contingencies of strategic decision making within the strategic tripod framework and CEO age effect. Furthermore, we focus on the effect of the interaction of these aspects on strategic decisions. Multiple theories and concepts are applied in this paper, such as the institution-, industry-, and resource-based view, upper echelons theory, socio-emotional wealth, empathy, and so on. Specifically, we focus on why Chinese real estate firms decide to enter the aged housing market. By conducting an empirical study using panel data from 134 listed Chinese real estate companies, we make the following conclusions: Institutional pressure and competitor numbers positively affect, whereas slack harms, the likelihood of entry. Ceteris paribus, the resource effect is strongest when the institutional effect is the most significant. When facing institutional pressure, a firm with a CEO older than 50 is significantly more likely to enter the aged housing market than firms with a CEO that is younger.Relieving institutional pressure and avoiding cutthroat competition are helpful in making strategic decisions but not for digesting slack resources. The CEO makes strategic decisions by replying to institutional pressure but likely not from engagements in resource or competitive affairs.
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Keywords
strategic tripod perspective
upper echelons theory
behavioral theory
CEO empathy
aged housing in China
emerging market
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Issue Date: 23 October 2015
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